Non-Tariff Trade Barriers in China by Jingzhou Tao and Diarmuid O'Brien. Hong Kong: Sweet & Maxwell Asia, 2003. 357 pp. $63 softcover.

Though doing business in China has no doubt become easier during the reform period, it has not become less complex. As this new book by lawyers in the Beijing office of Coudert Brothers point out, China's investment regime and international trade system are "embedded" within a web of restrictions. China's commitments to the World Trade Organization (WTO) go a long way toward bringing China's trade and investment regimes into line with international norms, yet nontariff trade barriers persist, making this book timely.

The authors have undertaken a grand task, namely to identify the many "difficulties" of trading with or investing in the country. They succeed admirably in covering a broad range of topics—from foreign exchange management to intellectual property rights (IPR) issues to standards and trading rights—with a detailed examination of the development of regulatory and administrative barriers up to the present day.

The book offers concise analysis of China's existing legal framework along with interesting anecdotes and case histories of the rules in actual implementation. It is divided into six chapters, the first five of which address foreign exchange, IPR protection, distribution, trading, and standards. Each chapter summarizes the recent history of an issue, providing coherent context to the description of the key regulatory requirements as they exist today and moving forward through China's implementation of its WTO commitments. Tables and flow charts are included to help summarize the often-complicated procedures. The final chapter addresses China's WTO service schedule commitments for specific industries and moves beyond a simple recitation of the market access phase-ins by linking the regulatory environment to actual investments made in the sectors and the complications that have arisen.

This book is a solid reference for any manager or service provider working on China who seeks explanations of China's broad regulatory regime. The book is not meant to be a manual for specific procedures; managers will need to consult professional service providers for the latest developments in tax, foreign exchange, and investment guidelines in China's rapidly changing regulatory landscape. Yet the book has prolonged its shelf life by providing the history and context of the many barriers foreign companies will continue to face in China.

—Brian L. Goldstein

Brian L. Goldstein is former research manager in the Beijing office of The US-China Business Council.

When Asia Meets China in the New Millennium by Chi Lo. Singapore: Pearson Prentice Hall, 2003. 190 pp. $23.50 softcover.

H ong Kong-based economist Chi Lo takes an unsentimental look at the ways that Asia must to adapt to compete with China's already formidable economic strength in When Asia Meets China in the New Millennium. Brushing aside the doomsayers—those who argue that the rest of Asia has no chance against a rising China—Lo marshals basic macroeconomic theory and recent history to argue that China can be a catalyst for reform and healthy competition in Asia in the future.

Lo surveys the causes and effects of the Asian financial crisis; the decline of Japan as an economic powerhouse in Asia; and the recent growth and remaining challenges facing China's developing economy. In the process, he makes some assertions that should reassure Asian economies looking at China's rise with something close to dread. In particular, Lo argues that China will not be first in every industry, and thus economies that find their true comparative advantages will be able to thrive.

Specifically, he delves into the China-Hong Kong, China-Taiwan, and China-Japan relationships in separate chapters to suggest ways that the three economic powerhouses can adapt to China's emerging role as an economic center of East Asia. He also notes the roles of the US and European economies in influencing global supply and demand for Asian goods and services.

Written before the recent high-profile attacks by critics in Europe, Japan, and the United States on China's economic success (which they attribute to an artificially undervalued currency and other unfair trade practices), When Asia Meets China's brisk analysis of recent economic history offers some useful context to business readers looking for an antidote to these shrill headlines.

—Catherine Gelb

Catherine Gelb is editor of The CBR.

The Evolution of the Stock Market in China's Transitional Economy by Chien-Hsun Chen and Hui-Tzu Shih. Northhampton, MA: Edward Elgar Publishing, 2002. 187 pp. $80 hardcover.

T he collapse of Enron was not only a clarion call to America's financial institutions and stock market watchdogs, but a loud warning to nascent capital markets around the world—including China's—about the need for regulation and abundant oversight. Whether China can transcend the growing pains often associated with emerging markets is critical to China's economic growth. But as China lists more state-owned enterprises, it runs the risk of continued stock price volatility, fraud, and stock manipulation (known in China as "stir-frying stocks"). These issues are troubling enough to command the attention of China's top policymakers.

In The Evolution of the Stock Market in China's Transitional Economy, Chien-Hsun Chen and Hui-Tzu Shih, both at the Chung-Hua Institution for Economic Research in Taiwan, have produced an informative and insightful study of China's stock market development. They firmly place the growth of China's capital market in the context of China's shift from a centrally planned to a market-oriented economy. In doing so, the authors develop several intriguing propositions to explain the inefficiency of the Chinese stock market. For instance, the authors cite the lack of true competition among companies and the inconsistent quality of publicly traded firms as the fundamental reasons why China needs a robust regulator and more regulations. But many Chinese regulations have the unintended consequence of serving as bureaucratic impediments rather than as liberalizing forces. The more informed prescription might not be more regulations, but better enforcement.

Perhaps, as the authors contend, the lack of proper legal institutions in China contributes to the flagrant disregard of regulations by public companies and individuals in their quest for profit. "Violations of trading rules, a phenomenon that tends to accompany institutional transformation," the authors write, "occurs frequently in China's stock market; since 1993, there have been more than 100 cases of listed companies and an equal number of cases of financial institutions and securities firms having had penalties imposed upon them by the CSRC [China Securities Regulatory Commission] or other relevant agencies." But trading violations are not a phenomenon restricted to transitional economies.

The better question would be, Why have there only been 200 recorded violations over a 10-year period? On any given day, the US Securities and Exchange Commission sanctions by administrative proceeding or initiates a federal court action against a dozen corporations, brokerages, and individuals.

To the authors' credit, they provide empirical data of the performance of several listed companies based upon variables such as profitability, liquidity, stability, management performance, and growth. Their analyses showed that all of these variables markedly improved after a company listed. Furthermore, in purely quantitative terms, the data also demonstrated that, on the whole, Shanghai-listed companies perform better than Shenzhen-listed stocks.

In The Evolution of the Stock Market in China's Transitional Economy, the reader will find a straightforward account of the development of China's stock markets that further clarifies the role China's capital markets will play in the country's financial future.

—Mark T. Fung

Mark T. Fung is a PhD candidate in China Studies at the Johns Hopkins School of Advanced International Studies and on the Term Member Advisory Committee at the Council on Foreign Relations in Washington, DC.

China's Techno-Warriors: National Security and Strategic Competition from the Nuclear to the Information Age by Evan A. Feigenbaum. Stanford, CA: Stanford University Press, 2003, 360 pp. $55 hardcover.

C hina's Techno-Warriors is an exceptionally well written volume, whose lively literacy helps turn a doctoral dissertation into an informative and meaningful interpretation of the broad course of China's pursuit of high-technology development from the early years of the People's Republic to the present. In tracing this evolution, Evan Feigenbaum, a member of the policy planning staff at the US Department of State, with responsibility for Chinese, Japanese, Korean, and Southeast Asian affairs, as well as Asia-Pacific strategic issues, touches upon the psychological and even emotional roots of China's long-standing pursuit of national technological prowess and the poignant contradictions that beset the traditional technology-acquisition strategy in an era of increasing Chinese integration with world markets and economic systems.

Along the way, business readers with interests in China's technology development policy—and in issues relating to US-China high-technology trade—will recognize some familiar agencies and actors, but will meet others for the first time. The mosaic of military, industrial, and political forces that have formed China's strategic approach to the development of advanced technology has changed over time, but an understanding of the continuum that has led to present-day approaches can only be helpful to businesspeople today. China has not changed so much that the facts and the personalities of 30 and 40 years ago are now unrecognized and forgotten.

Feigenbaum starts from the moment in the mid-1950s when Mao Zedong accepted the argument, advanced principally by Marshal Nie Rongzhen (one of China's top revolutionary military leaders), that the PRC needed to aim for the top in strategic weapons development. Nie wanted China to build its own atomic devices and delivery systems because in a world of ubiquitous foreign threats it could not afford to allow its defense systems to remain permanently backward, and because strategic weapons development held the key to the successful pursuit of comprehensive technological modernization in the Chinese economy.

Once Mao bought in to this formula, Nie built a strategic weapons sector that, as Feigenbaum artfully reveals, displayed many of the intellectual and professional characteristics of sophisticated, modern high-tech sectors in advanced industrial nations: creativity, horizontal linkages among agencies, peer review, and so on. This tight-knit, flexible, often-brilliant band of scientists and military people survived most of the political blood-lettings of the late 1950s, 1960s, and 1970s largely unscathed.

Feigenbaum moves his story forward into the post-1978 reform period, dwelling at length on the regime's attempts, especially in the "863 Program" begun in 1986, to provide resources and strategic guidance to cream-of-the-crop technology development, even as the thrust of China's overall strategy increasingly emphasized civilian production, economic integration with the "outside world," and indeed the market economy itself. By the end of the book, Feigenbaum's study suggests that while the legacy of China's approach to strategic military technology development had produced brilliant achievements and virtually defined China's national approach to advanced technology into the 1990s, changes in global technology and in China's own economic systems by the turn of the new century were so great that the state-driven, sometimes almost isolationist, approach to high-tech development had become a drag on future development. His concluding reflections on this dilemma make a compelling close to a thoughtful study.

—Robert A. Kapp

Robert A. Kapp is president of The US-China Business Council.

China: Air, Land, and Water—Environmental Priorities for a New Millennium Robert T. Livernash, ed. Washington: The World Bank, 2001. 174 pp. $30 softcover (including CD-ROM).

I n this report, the World Bank presents environmental strategies to improve the management of China's natural resources, focusing on land, water, and air policies in the decade ahead. China: Air, Land, and Water was published shortly after China entered the World Trade Organization and just as China's State Environmental Protection Administration (SEPA) confirmed its 10th Five-Year Plan (2001-05).

China's size and diversity complicates environmental policymaking, which severely limits SEPA's ability, let alone that of the World Bank, to monitor developments. Most of the data and background for this report came from a dozen or more Chinese research institutes, many affiliated with the Chinese Academy of Sciences. The result of this collective effort will appeal to those interested in Chinese environmental administration and natural resources issues at large in Asia.

The book begins by asserting that economic growth in the past two decades reduced Chinese poverty and improved environmental protection, but acknowledges that this growth created new pressures on natural resources. In the cities, home to about 30 percent of the population, air pollution is severe and on the rise. In the countryside, land degradation is a serious environmental issue. In industry, pollution from the town and village industrial enterprises, the pride of Chinese economic reform, has forced the government to attempt to impose regulatory discipline. The authors criticize the government's strategy to boost economic growth at almost any cost and instead call for "sustainable management and development."

From these beginnings, the World Bank addresses specific pollution management issues. The authors isolate desertification and salinization as serious problems in western China, and deforestation in northern China. Pollution resulting from industrial and urban growth plagues coastal seas. And despite considerable progress in addressing environmental issues, the government has failed to address basic domestic environmental problems, such as the widespread use of solid fuel—including coal—for cooking and heating. To alleviate this last problem, the authors call for reduced dependency on coal.

The final third of this study analyzes the government's national environmental priorities, while outlining the World Bank's current and planned environmental strategies in China. The authors recommend management through what they term "institutions, instruments, and investments." The authors advocate better coordination among government agencies to implement legal and economic reforms, alongside vaguely identified targeted investments.

The report's main weakness is its inability to spell out a specific environmental strategy for China and define what sustainable development actually means in China. In the world's largest country, sustainable development is bound to mean different things to a Chinese peasant from Anhui, a government official in Xinjiang, a foreign investor, or a Beijing-based official at the World Bank. The report leaves the reader to guess whether China should follow development models of its own, or those borrowed from abroad.

Impeccably organized and rich in data, this report nevertheless suffers from insufficient attention to local detail and realities on the ground. Little is written about the role of China's many environmental nongovernmental organizations, or of local education in protecting natural resources. Perspectives on major environmental problems from Chinese state researchers and a World Wide Fund for Nature analyst are available as background papers in an attached CD-ROM, which helps broaden the book's scope.

—Victor Zatsepine

Victor Zatsepine, who lived in China for nearly 10 years, is a PhD candidate at the University of British Columbia in Vancouver, British Columbia, Canada.

Shanghai Business Travel Guide by Lawrence DeAngelo. Business International, 2002. 69 pp. $14.50 Adobe PDF format.

S hanghai Business Travel Guide is an e-book for businesspeople with little or no experience doing business in China, and for this audience the book will be very useful. The format is a 69-page multimedia Adobe Acrobat document, available for purchase online (http://www.buymyebook.com/buy/authorinfo.asp?id=854X1056Y3) and delivered by e-mail. Content includes condensed travel and cultural information, links to extensive Internet resources, and embedded voice selections in Mandarin. The author, an American who has lived and worked in Asia for almost 20 years, compiled this guide with the help of Shanghai-based businesspeople.

The Travel Guide is a worthwhile resource for both planning and executing a Shanghai business trip. The first section deals with pre-travel requirements and concerns—the PRC visa application process, potential health issues, hotel reservations, and cost estimates useful for developing a travel budget. Next, the focus shifts to travel considerations specific to China, and Shanghai in particular. Topics include weather patterns, local customs, restaurant recommendations, and nightlife spots. The third section outlines the standard knowledge required for business meetings, including greetings and farewells, conduct expected at Chinese-style business meals, and the acceptance and refusal of gifts.

An especially useful feature of this e-book is its multimedia audio component. The guide features six pages of common Chinese words and phrases, written in pinyin and embedded as audio files that link with your computer's RealAudio player. This provides an excellent opportunity for travelers to hear Mandarin for the first time, or to revive those dormant language skills, while passing time on the cross-Pacific flight or in a hotel room. The technology is easy to use and requires no downloads beyond the free RealAudio player. In fact, this function makes the book a useful purchase for any laptop-carrying traveler, with business objectives or otherwise, who wants to gain a basic Mandarin Chinese vocabulary.

The book includes accurate contact listings for 23 top-quality hotels, as well as informative introductions to tourism and entertainment areas and restaurant recommendations for many types of international and Chinese cuisine. And most important, as foreigners living and doing business in Shanghai, we can attest that the book gives sound advice and recommendations on where to go for good lodging, food, and entertainment.

The section on business etiquette is a great first introduction to what is and is not expected of you in China. It lays out a few simple rules that should help you through those first nervous encounters. The good news is that Chinese hosts will be impressed that a China neophyte makes the effort to do things the Chinese way and are not likely to walk from the negotiating table for minor transgressions. But travelers ignore the brief mentions of the importance of "face" at their peril. Mistakes in this area can break deals.

The book also informs the novice China business traveler about initial problems and "culture clashes" that Westerners commonly experience in China, both in business and in everyday life. The guide provides useful recommendations on table manners at a business dinner, whether or not to tip the bellhop, and even how to deal with locals' curious stares. Though most of this information is worthwhile and quite informative, the author's advice about bargaining customs is somewhat misleading. The book says, only somewhat facetiously, that business travelers should ask for a discount when buying anything in Shanghai and should start by asking for 50 percent off. In reality, this advice only applies to open air markets, which are becoming less common in this, China's most modern city. Most stores now adhere to sticker prices, and visitors who try to bargain in these places may end up embarrassing themselves.

Finally, though most of the information is accurate, we discovered a few minor errors. For instance, the lobby bar in the Hyatt is on the 54th floor, not the 47th, and some of the pinyin romanizations of Chinese words are incorrect. And, as with any travel guide, the information in Shanghai Business Travel Guide may soon become dated. Shanghai is a dynamic city, with restaurants and other venues frequently opening, closing, and switching locations. Similarly, links to independent websites inserted throughout the book may also change. Nevertheless, Shanghai Business Travel Guide remains a good introduction for the novice business traveler to Shanghai.

—Adam Ross and Iain K. McDaniels

Adam Ross and Iain K. McDaniels are research associate and deputy director of China operations, respectively, at The US-China Business Council in Shanghai.